California On The Brink: Pension Obscenity
Elizabeth McDonald writes at FoxBusiness that a growing number of California cities are way worse off than previously thought, thanks to changes in how they must account for their pension costs:
The new rules could nearly double California's unfunded liabilities to $328.6 billion. Moreover, California cities that have already filed for bankruptcy protection, like Stockton and Vallejo, will fall deeper into the red.Officials in these California cities did not return calls for comment.
Government retiree costs to date have been improperly underreported nationwide to taxpayers, says Moody's. New government rules in effect at the end of this month from the Governmental Accounting Standards Board seek to fix this problem, which could show California is worse off than expected. A growing number of Senators also now warn these pension costs could result in a taxpayer bailout of the states.
...Moody's new credit standards for public pensions would nearly double the unfunded liabilities for state and local pension plans in California to $328.6 billion from $128.3 billion, says the California Public Policy Center, based on state data. That cost potentially amounts to $8,600 per state resident, it says.
I'm guessing that's $8,600 per year.
A taste of the obscenity:
One retiree in the County of Solano pulls in nearly $371,000 a year in retiree pay. Nearly 12,200 government retirees get $100,000 a year, including 94 city retirees in Stockton.A retired librarian in San Diego somehow gets a $234,000 annual pension. A Newport Beach lifeguard got to retire at age 51 with a $108,000 annual pension plus health-care benefits.
via @reasonpolicy
This is the telling statement:
This going to be on the back of every citizen for the next fifty years.
We and at least the next generation is screwed by this and the rest of the debt.
Jim P. at June 13, 2013 5:57 AM
If people in some states are going to have to bail out people in other states, one of the conditions should be revocation of statehood for the bailed-out states. They should revert to territory status and be placed under military governance. At some future time, when the mess is finally cleaned up, voters and representatives can take a look at future statehood and what it should look like -- state lines, structure of the government, the state constitution, etc.
Cousin Dave at June 13, 2013 6:15 AM
As I understand it, and I could be wrong, a state bankruptcy and default on pensions, triggers those pensions being taken over by an arm of the Resolution Trust Corporation called the PBGC which at one time, capped their pension payments to 50k.
This is the ideal solution, if that is what happens, because the haircut will be substantial for the hundred k plus pension holders, and the little guys won't be hurt at all.
http://pbgc.gov/
Isab at June 13, 2013 6:39 AM
"Obscenity"? Anyone here watched "Bulworth" yet? He does a whole rap about "obscenity"! It's great! I tried to link it but the youtube link isn't working.
Flynne at June 13, 2013 6:42 AM
Many recent articles about the California and Illinois pension disasters have a reference to a possible bailout by the federal government. I cannot fathom why taxpayers from some states states shoud be paying the price for those states that overspent so drastically. Not only is there no moral basis for it, but a a federal bailout will discourage financial restraint by the other states.
Nitt at June 13, 2013 12:04 PM
From a John Boehner interview:
Now, you are speaker of the House of Representatives. The House has the exclusive power the purse. The House has a Republican majority.
Why can't you and your fellow compatriots write a freaking balanced budget and send it for passage.
When the Senate or the President refuses to pass or sign it tell them in clear terms "Fuck you! We are representing the free citizens of the United States."
Don't back down, don't compromise. The United States Constitution says:
Tell the Senate they have no choice but to concur, now, or when they are voted out of office.
Jim P. at June 13, 2013 8:11 PM
We and at least the next generation is screwed by this and the rest of the debt.
Not really. This is going to be defaulted upon at some stage, probably sooner rather than later. To be precise, we'll be screwed by the effects of the collapse and the default, not by the debt itself.
Grey Ghost at June 14, 2013 6:24 AM
warn these pension costs could result in a taxpayer bailout of the states
In a word: no.
I R A Darth Aggie at June 14, 2013 7:14 AM
Jim P, I believe the house has passed several budgets and for the last thousand plus days, the senate has refused to bring any of them to a vote.
Isab at June 14, 2013 10:03 AM
Yes, I know. Boehner needs to get his hands on the Prizm data of the Senators. ;-)
Jim P. at June 14, 2013 8:01 PM
Jim P. at June 14, 2013 8:02 PM
Jim, I think everything will hit right after the 2014 election.
To me, the big issue is not the Prism data. The big issue is that the government collecting it, is now at the beck and call of the Chicago machine.
Isab at June 16, 2013 12:53 PM
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